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Will Natural Gas Pick Up Market Share?

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    Citi Energy Futures Analyst Tim Evans gives his outlook for natural gas prices.

  • Duration 3:53
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And cooler temperatures will bring -- suppressed demand for natural gas but will be enough to make a dent in the glut of supply that has been weighing on prices Chesapeake Energy for example we told you just saying that -- cut back.

More than 500 billion million cubic feet -- output a day in May be willing to cut up to a billion.

Let's bring in the expert Tim Evans is energy at analyst energy futures analyst with Citi.

-- much for joining us for so thrilled to have you -- there are still many things you know really pulling in the other direction for natural gas right now the web there.

The glut -- supply how much supply we've seen come on from fracking do you as a real structural change in the price of natural bounce.

Will fight I -- scene that we've seen strong growth on the supply side.

We have had weak demand growth overall natural gas consumption in -- -- was down about 3% year on year.

So you have supply up demand down -- inventories building up to a record level.

A record surplus for this time a year.

So that's how we got here -- we went up from here we can be we have prices that a near ten year low gas.

Going forward I see that we're gonna have a grip tool evolution we are gonna see some of these production cuts we've seen.

The -- -- number drilling rigs working.

In the US declining.

Substantially over the last couple of months.

Eventually -- gonna translate into slower growth may be even some year on year decline in production by the end of the here.

-- thing happening in what do you see happening for consumers in the near term will they get to take advantage of these are prices.

Well yeah absolutely I mean for those who have home heating with natural gas.

This has been that it nice break this winter because.

Not only did that are the volumes down.

Because of the warmer weather but the price is down as well.

Yeah do you think you're designing a blow to box at the big question for -- well I I think there's risk that we see a short term drop.

Close to two maybe even below two -- short period of time -- view that it's a nice buying opportunity though because as we.

Rebalance going forward.

We can expect a more normal weather.

We can expect to see.

Maybe Bruno based I don't know -- maybe a more normal weather and and I think -- the the production growth is gonna slow down we've had this big technological change.

There going to horizontal drilling these tight shale formations all that story.

A big success story for the -- -- But I think the the initial enthusiasm.

For rushing in there will will -- slow things down.

In the long term I mean could this signal real structural shift in the US where we all of a sudden have this big supply of natural gas that's a lot cheaper than -- had been in the past.

Could it lead to save more manufacturing jobs.

More you know more industry -- manufacturing coming here that makes sense now that energy is cheaper.

I I think -- this is a very cyclical business.

And -- we often see these these disconnect between.

Supply racing ahead and then we'll see is -- and demand we're going to pick up some demand going forward.

Coal fired power plants are going to be retiring.

Over the next three to -- years maybe 45000.

Megawatts worth of power that.

Natural gas has an opportunity to pick up some market share in the utility side the battle -- a lot of it so -- soak -- some of it.

Transportation is another.

Area we -- Natural gas should be picking up some market share natural gas much cheaper than diesel fuel at this we'll see certain.

A boon Pickens has been pushing for that for a long time gets you so much for joining us routed Tanzania to appreciate it.

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